Investors may regret not warming up to Microsoft

FORTUNE — Microsoft’s obituary has been written plenty of times. There was no place for the software mammoth in a tech world designed — and dominated — by Apple. CEO Steve Ballmer was unable to steer the company to a position of growth, leaving Microsoft selling PC software in a post-PC world. So often has Microsoft been written off as irrelevant that investors have largely stopped believing in the stock, which has spent the bulk of the past ten years in a tight range between $25 a share and $30 a share. On Monday, the stock closed around $27, which is where it traded around this time of the year in 2008, in 2006, in 2004, in 2001 … you get the idea.

In the past five days, however, Microsoft’s (MSFT) shares have risen by 5%, following the presentation of its latest operating software, Windows 8, to developers. Designed as a fresh start for Windows, it attempts to bridge mobile devices, tablets and traditional PCs. That modest uptick is a sign that investors that have so long written off Redmond’s stock may be doing so at their own peril.

In early reviews, Windows 8 received perhaps the strongest praise ever for a version of its operating system and opened up the possibility that Microsoft could in fact become relevant in the so-called post-PC world. Jean-Louis Gassée, a former Apple (AAPL) executive, wrote that the touch-based Metro user interface added to Windows 8 “is a step along the ‘Windows Everywhere’ road that leads to a single, elegant UI for all Microsoft-powered devices, whether they’re PCs, smartphones, or tablets.” TechCrunch called it “actually quite cool and quite intuitive.” Even John Gruber, an influential Apple blogger, conceded “it could utterly fail as an iPad competitor, but still be a successful OS.”

Okay, much of that may be damning with faint praise, but consider that, only a year and a half after Apple released the iPad, Microsoft has built from scratch an operating system that is winning comparisons to iOS. As Steve Jobs pointed out in a 1996 interview unearthed by Philip Elmer-DeWitt, it took Microsoft 10 years to catch up to the operating system that Apple created in the 1980s.

Microsoft will never become the driving force of innovation that Apple is today. But it can excel again at the thing it was good at in its glory days: copying the innovators and selling it at large-scale to a vast customer base. That is what Microsoft has been pushing for with Windows Phone 7. Aside from an innovative user interface of its own, the mobile OS doesn’t break a lot of new ground. But throw in access to Nokia’s global customers and, suddenly, some analysts see Windows Phone 7 taking a 21% market share in 2015, surpassing Apple’s 15% share.

Windows 8 isn’t likely to raise any innovative bars either, but it could keep Microsoft in the race as tablets vie with netbooks in a tech world moving further into the cloud. Most securities analysts following Microsoft were impressed, with a few predicting Microsoft will rise as high as $34 or $35 a share. In other words, Windows 8 and Windows Phone 7 could push Microsoft 30% higher.

Investors weren’t so enthralled. Microsoft staged its developers conference to coincide with an annual meeting with analysts and investors. There, investors seemed most interested in getting a bigger piece of Microsoft’s $53 billion worth of cash to be paid into dividends. Such demands are usually made to companies expected to see little, if any growth. Microsoft’s revenue is growing around 6% a year compared with a 50% growth rate for Apple. It’s the same old story: Microsoft isn’t Apple, so it must pay a dividend.

In the near term, a fatter dividend may be the only thing to make investors happy, but Ballmer — who keeps facing calls for his replacement as CEO — is finally starting to do a decent job of laying the foundation for Microsoft’s long-term growth — growth that could return to the double-digits.

Windows 8 has a long way to go before it can start adding to Microsoft’s revenue. It’s unlikely to launch before the end of Microsoft’s fiscal year, which ends in June 2012. Sales could disappoint if Microsoft fails to work out any potential kinks or if users are uncomfortable with the new interface. But Windows 8, like Windows Phone 7 before it, offers Microsoft something the company hasn’t had in a while: a core product that could keep the company relevant for years. If Microsoft succeeds in making that happen, investors may one day regret this chance to have gotten its shares for cheap.

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